AFRICA - CONTINENT OF THE FUTURE?
Written by Richard Dowden, Director of the Royal African Society
In 1995 Africa was known as 'The Last Frontier'. Few businesses invested there and tourists kept away. However, since China paved the way by successfully investing in Africa's raw materials at the start of the 21st century, Africa is becoming a more viable option for business and tourism. Three other motors are also driving that change: mobile phones, the emergence of a new African middle class and better government. Africa is fast becoming the new hot property, the place to put your money. If the money stays there and capital created in Africa is retained and reinvested productively there, the 21st century may indeed belong to Africa as much as Asia.
 At the turn of the century Africa’s fortunes seemed to change for the better. In the late 19th and 20th centuries, Europe and America were the main outside players but suddenly at the beginning of the 21st century, Asia began to take a greater interest in the continent. Armed with billions of dollars, China targeted Africa’s raw materials, everything from copper to cocoa. It wanted control of supply at source. Chinese companies opened mines in areas where white men had long feared to tread. They built roads into mountains that previously had only tracks and started to rebuild ports and railways. Its investments, backed by the Chinese state and private capital, were soon outstripping the rate of western investment in Africa.
That investment has driven African economies at around 5 per cent since 2000. When oil shot to nearly $100 a barrel between 2003 and 2007, African producers suddenly became fabulously wealthy overnight. But African states without oil also continued to grow as well. The last time this happened, in the 1970s commodity boom, African governments borrowed heavily and threw a party, spending on prestige projects rather than investing in their people. When the prices began to fall, the party ended. Most African countries borrowed to keep their growth rates up but woke up with a hangover which lasted into the 1990s. This time many experts believe that this is not a temporary or cyclical gold rush but a permanent change in Africa’s fortunes.
In the mid 1990s twenty six African states were involved in war or major social disruption. Fifteen years later only two substantial wars are still burning, Somalia and Eastern Congo. Others may explode, a peaceful transition to an independent South Sudan looks unlikely, but much of war-torn Africa is now at peace. Back in 1995 Africa was called “The Last Frontier”. Few businesses invested there, tourists kept away, diplomats avoided it, newspapers ignored it unless there was an exceptionally nasty war or a famine.
The Chinese crossed that frontier and others have followed. Today Africa is part of the rest of the planet again. Three other motors are also driving that change: mobile phones, the emergence of a new African middle class and better government. Aid, the Western solution to Africa’s problems, plays only a minor role.
When I lived in Uganda in the early 1970s I saw a telephone twice. Outside South Africa, the continent was barely part of the world telephone system. A scarcity of fixed lines and a lack of maintenance meant that the most common sound on the African telephone network was a polite recorded voice saying, “The number you require is unavailable. Please try later.”
Then came mobile phones. The idea that phone companies would invest in such cutting edge infrastructure in poor Africa seemed far-fetched. The idea that ordinary Africans would buy mobile phones and use them, even more so. Maybe a few from the Wabenzi tribe would have them, along with their Rolex watches, flashy suits and Mercedes. But ordinary Africans using telephones? When the South African MTN Group investigated Nigeria as a possible market for mobile phones in the late 1990s, their experts estimated that the maximum number of potential subscribers would be 15 million. They opened in Nigeria in 2001. By 2007 there were nearly 30 million subscribers. Then it was estimated that figure would reach 52 million by 2011. In 2009 it was 58 million.
That wild underestimation of Nigeria’s mobile phone market was repeated throughout Africa. It showed two profound misunderstandings of the continent: first, Africa’s ability to pay, and second, its desire to communicate. Africa was a lot richer than the economists of the World Bank and the IMF had thought. Africa's mobile market has been the fastest growing in the world. Between 1999 and 2008, the number of mobile subscribers in Africa jumped from 7.5 million to 300 million. The mobile phone companies did not realise the huge demand would be at the bottom of the pyramid as well as the top.
Connectivity now reaches the remotest places. Suddenly you can call London from a village more than fifty miles from a town in northern Nigeria. It is not, as expected, just the middle-class professionals who use mobiles. Villages and shanty towns bleep and jingle as much as high-tech urban offices. Everyone wants a mobile phone, just as much as they once wanted shoes. The pay-as-you-go cards solve the problems of billing – the postal service does not work either in much of Africa. Decades of airtime are sold through plastic scratch cards available from private traders in smartly painted booths and shops in every village. The phone companies get their money back instantly and have made fortunes.
Instant communication is the most important factor bringing back African professionals from exile.
Walk through a market in a Nigerian village and you will hear the market women checking the price of potatoes in the nearest town; visit nomads in Somalia and you will find them, herding-stick in one hand mobile in the other, learning the best moment to come to market to sell their animals. Fishermen off the Tanzanian coast check which beach or port to bring their catch to. And everywhere in Africa no taxi driver will let you get out before he has given you his mobile number. No-one predicted any of this.
Instant communication is the most important factor bringing back African professionals from exile. Kofi Bucknor came back to Ghana with his family. His office is in a broad, quiet street, close to Accra’s international airport. The house is modest and neat, set in a garden behind high walls, though the gates would not look out of place at Buckingham Palace. The waiting room is elegantly furnished with Persian carpets, a bark cloth printed with a map of Africa, African stone carvings and a beautiful dark wood table. Kofi greets me in a loose white shirt, slacks and sandals and immediately takes a call from America on his Blackberry.
His CV looks like that of a high-flying merchant banker: MBA from Columbia, joined the First Boston Corporation, moved to the Chemical Bank where he ran the Abidjan branch, then across to the African Development Bank in 1986 and back to the private sector with a move to London and Lehman Brothers in 1994 then to the Cal Merchant Bank in London. He also serves on numerous policy and advisory committees, holds several directorates and chairs the Ghanaian stock exchange.
But he always wanted his children to experience growing up in Africa and decided to come back. “Three factors made it possible,” he says. “One, the Internet; two, mobile phones; and three, satellite TV. Suddenly the world is flat and I can get the same info in Accra as I could in London. I guess I can operate here now at 70 to 80 per cent efficiency. Before, it was about 20 per cent. I could probably have made bigger bucks in the City of London but the quality of life here is much better, especially for my three kids. I’m fifty-two, I have a ten-minute drive to the office. I dress how I like. I have a beach house in a fishing village not far away. It’s a good life. My generation are coming back to Ghana and starting to make the country the way it was back in the 1940s and 1950s.”
Two countries away in Nigeria, Osaze Osifo looks across the grey Atlantic from the eighth floor of a new sheer glass block on the Lagos seafront. The line of ships at anchor stretches to the horizon, waiting to come into Lagos port. The queue is symbolic of the world’s long wait to do business with Nigeria. The waiting time is up to three weeks. That’s an improvement on the 1970s when the waiting time averaged 240 days.
Osaze in jeans and a white shirt wanders around his company’s newly furnished, open-plan office with everyone visible and accessible. There is no Big Man here, no hierarchy and nothing flashy or grand. Again the new professionals are not suits. Osaze himself, small, soft-voiced, plain-speaking, calls in other members of his team as we talk and encourages them to join in the discussion. He too has returned to Africa from a lucrative banking career in London, launching a private equity company.
Unlike Kofi, Osaze admits he will probably make more money in Nigeria than in London. Nigeria is booming at the moment. But he adds that those who are in business just for the money are doing it the Nigerian way. He doesn’t want to fawn on the Big Men business-politicians. He needs to operate international standards of accountability and transparency because he is bringing in international money.
“The environment is big enough at present,” he says. “We see opportunities opening up across West Africa from Angola to Senegal, so we can afford not to do things the Nigerian way. The type of people we have on our board shows we don’t want to get things with bribes. We are real people with real jobs. Not cronies.”
This clean business space seems to have opened up during President Olusegun Obasanjo’s second term. Heavy international pressure forced him to appoint an economic team who knew what they were doing and where they wanted to take Nigeria. They set up the Economic and Financial Crimes Commission, reduced the number of banks from eighty-nine to twenty-five and cut their non-performing loans to around 10 per cent. They also let the telecoms revolution happen. The GSM licences were sold cleanly.
The type of people we have on our board shows we don’t want to get things with bribes. We are real people with real jobs. Not cronies.
“It’s quite simple,” says Osaze.
"All the government needs to do is create an environment in which we can do things properly. People are starting to do this instead of being agents for cronies. Bright young Nigerians are coming back. There is a will to have an irreversible change. It’s a mindset, a way of doing things in a less corrupt way. There are a lot of people in Nigeria who have never seen things done properly before."
Elsewhere in Africa, democratic pressure, supported by western countries, has forced governments to deliver a bit more for their people. China’s lack of interest in democracy may not support regular elections, transparency or accountability but China’s rulers know only too well that political stability depends on governments delivering a better life for people. They will find it increasingly difficult to get anything done in countries mired in corruption that ignore the plight of the people.
So that is the third factor driving change in Africa, better run governments. With better governance comes more investment and the circle becomes a virtuous one, rising on the tide of economic improvement. A recent report by McKinsey, an international consulting company, said that only 32% of Africa’s current growth was down to the demand for natural resources, the rest was wholesale and retail, services telecoms and manufacturing. Its upbeat report was called “Africa on the Move”.
At the moment there are still two Africas. One is sunk in poverty, with a swelling population but meagre health services and poor education. The other is the new hot property, the place to put your money. If the money stays there and capital created in Africa is retained and reinvested productively there, the 21st Century may indeed belong to Africa as much as Asia.
Richard Dowden first worked in Africa as a volunteer teacher at a bush school in Uganda in the early 1970s. On his return to Britain he was employed by a peace organisation in Northern Ireland and then became a journalist, and was made Editor of The Catholic Herald in 1976. After joining The Times foreign desk in 1980, he reported from the Middle East and Africa, before being appointed Africa Editor at The Independent when it was founded in 1986. During the next nine years he visited almost every country in sub Saharan Africa. He later became Diplomatic Editor.
In 1995 he was invited to join The Economist as Africa Editor and continued to travel regularly to Africa. He left The Economist in 2001 and a year later, began working as a freelance journalist and writer. In November 2002 he was appointed Director of the Royal African Society.
In addition to writing extensively about Africa, he has made three full length documentaries on Africa for Channel 4 and the BBC as well as several shorter films. He also continues to write on African issues and appears frequently as a commentator on African affairs on the BBC, CNN, Sky News and other broadcast media.
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